With Supreme Court’s dismissal of Nokia’s plea it raise questions on the transfer of its India assets

Nokia India gets a big jolt on Friday when the Supreme Court rejected the plea by the handset maker over transferring ownership of its assets in India.

The apex court upheld the verdict by the Delhi High Court and ordered Nokia to give a guarantee of over Rs 2250 crore.

“The decision means that the case now reverts to the February 5 Delhi High Court ruling on the asset transfer,” said the company spokesperson.

The Delhi High Court in February had asked Nokia to furnish an undertaking by its parent company that it would meet any future tax liability for its India operations if the transfer is to happen.

Nokia India had moved the apex court against this.

“The company strongly believes its offer to the Indian tax department is fair for all sides, allowing its employees and assets to transfer to Microsoft while also providing the necessary financial guarantees,” the company said.

“Nokia is disappointed by today’s decision,” the spokesperson added.

The Supreme Court’s dismissal of Nokia’s plea is a big setback for the handset maker and could bring in more trouble for the Finnish company in its asset transfer process.

What does the whole thing mean?

It means there would be obstacles in the transfer of its assets in India -the Chennai plant that employs around 8000 people. The transfer of Chennai plant is part of Microsoft and Nokia deal where the former is acquiring the latter for over Rs 30,000 crore.
“Today, India’s Supreme Court declined to hear an appeal by Nokia on how its assets could be unfrozen and transferred to Microsoft,” a Nokia spokesperson said.

The Nokia India leadership has reiterated in the past that the entire transfer process would be completed in the first quarter of 2014. But after today’s verdict by the apex court the India arm of Nokia may face quite lot of difficulties, or it has to abide by the demands of the income tax department.

In its previous hearing on Thursday, the Supreme Court had asked Nokia to come back with the valuation of its India assets. But when the company submitted the valuation of its Chennai plant, the apex court showed its displeasure as the valuation was an internal report, and not by experts as suggested by the highest court.

“Who has valued the property? We had told you to submit a valuation report from an authorised valuer. We wanted some authentic report. This is a Nokia report,” said Justice Anil R Dave disapproving the report submitted by Nokia.

Now, if the plant is not allowed to be transferred, Nokia can run it as a contractor to Microsoft.